investment monthly – november 2021

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This commentary has been produced by HSBC Asset Management to provide a high level overview of the recent economic and financial market environment, and is for information purposes only. The views expressed are those of HSBC Asset Management, they were held at the time of preparation, and are subject to change without notice. These views are based on our global views and may not necessarily align with our local views, nor reflect the views expressed in other HSBC Group communications or strategies. This marketing communication does not constitute investment advice or a recommendation to any reader of this content to buy or sell investments nor should it be regarded as investment research. The content has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination. You should be aware that the value of any investment can go down as well as up and investors may not get back the amount originally invested. Furthermore, any investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in established markets. Any performance information shown refers to the past and should not be seen as an indication of future returns. You should always consider seeking professional advice when thinking about undertaking any form of investment.

For Professional Client and Institutional Investor Use Only

Cyclical anxieties and whipsaw marketsInvestment Monthly – November 2021

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Summary

Macro Outlook The post-Covid recovery has reached its apex, with many economies such as

the US and China now in the expansion phase of the economic cycle

The recovery is twin-track, with some EMs facing headwinds from past China credit tightening, slowing global goods spending, and the pandemic

Inflation volatility continues in the near-term. But medium-term inflation is likely to remain contained. Upside risks are more apparent in the UK, US and some EMs

Policy outlook In the West, focus is turning to the pace, duration and flexibility of tapering.

The boost from discretionary fiscal action in DMs is fading, but policy should remain supportive for now. “Fiscal space” remains to counter growth risks

Policymakers in Industrial Asia are focused on gradual normalisation, although The People’s Bank of China (PBoC) has struck a more dovish tone recently. Many other EMs have less policy space with some central banks tightening to contain high inflation

Key RisksHouse View In the expansion phase and after a phase of strong market performance, we

need to be realistic about returns. As unemployment rates fall, stocks should outperform bonds

Fixed income premia are close to zero – investors are not being rewarded for bearing risks in this space. However, the equity premium looks more neutral

Policy headwinds, covid, the dollar outlook will weigh on EM performance. But Asia & EM fixed income remains the stand-out valuation opportunity

Source: HSBC Asset Management, October 2021. The views expressed are those of HSBC Asset Management, they were held at the time of preparation, and are subject to change.

Sticky inflationMore persistent prices pressures

(mainly in the US) trigger a bond market tantrum, hitting risk asset performance

Pandemic developmentsThe pandemic drags on amid the

impact of variants and slow vaccine rollout in some parts of the world

Policy tighteningVaccine complacency or stimulus

fatigue could mean premature policy withdrawal

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House view

We maintain our preference for stocks over bonds as equity premiums remain significantly higher than those for fixed income assets, while on a historical basis, stocks outperform bonds while labour markets improve. A scenario of sticky inflation remains a key downside risk to overall market performance

Equities Government bonds Corporate bonds Alternatives Asian assets

Asset Class Houseview

View move Asset Class House

viewView move Asset Class House



viewView move

Global p – Developed Market (DM)

q – Global investment grade (IG)

q – EM aggregate bond (USD) 1 – EM Asian government

bonds (USD)q –

US 1 – US q – USD IG q – Gold 1 – Asia ex-Japan equities 1 –UK p – UK q – EUR & GBP IG q – Other

commodities 1 – China 1 –Eurozone p – Eurozone q – Asia IG p – Real estate p India 1 –Japan p – Japan q – Global high-yield q – Hong Kong p –Emerging

Markets (EM) 1 – EM (local currency) p – US high-yield q – Singapore p –

CEE & Latam 1 – Europe high-yield q – South Korea 1 –

Asia high-yield p – Taiwan 1 –

View move: – No change Upgraded versus last month Downgraded versus last month

Source: HSBC Asset Management, as at November 2021 The views expressed are those of HSBC Asset Management, they were held at the time of preparation, and are subject to change.

Equities – Value and cyclical factors have the space to perform, but upside surprises to growth are more limited at this stage of the cycle. Given the risks, maintaining exposure to other styles (quality, ESG) makes sense

Government bonds – Valuations have recently improved amid a repricing of inflation and interest rate risks. However, we believe risks to yields remain tilted to the upside. Remain underweight

Corporate bonds – Low spreads and some uncertainties on the default outlook mean that risks of capital losses in the short term remain. Asia bonds look preferable despite some risks related to deleveraging efforts in China

p Overweight1 Neutralq Underweight

House view represents a >12-month investment view across major asset classes in our portfolios

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Asset class performance at a glance

Note: Asset class performance is represented by different indicesGlobal Equities: MSCI ACWI Net Total Return USD Index. Global Emerging Market Equities: MSCI Emerging Market Net Total Return USD Index. Corporate Bonds: Bloomberg Barclays Global HY Total Return Index value unhedged. Bloomberg Barclays Global IG Total Return Index unhedged. Government bonds: Bloomberg Barclays Global Aggregate Treasuries Total Return Index. JP Morgan EMBI Global Total Return local currency. Commodities and real estate: Gold Spot $/OZ/ Other commodities: S&P GSCI Total Return CME. Real Estate: FTSE EPRA/NAREIT Global Index TR USDSource: Bloomberg, all data above as of close of 31 October 2021 in USD, total return, month-to-date terms

Global equities rallied in October, recovering the previous month losses amid upbeat corporate earnings releases and broadly robust economic data

Government bonds – Shorted-dated US and European bonds underperformed as investors priced in a more aggressive pace of global central bank policy tightening

Commodities – Oil and industrial metals made further gains, with higher natural gas prices boosting demand for petroleum

Past performance is not an indication of future performance

16.3 18.3

7.010.0 9.5

5.9

25.1

-23.7

-9.2

16.8

-0.3

1.2

-2.7-6.1

-1.5-6.1

46.3

18.6

5.11.0

-0.5

0.0

-0.5

0.1 1.55.8 5.3

-30

-20

-10

0

10

20

30

40

50

Global equities GEM equities Global HY corp bonds Global IG corp bonds Global governmentbonds

Global EM localcurrency government

bonds

Gold Other commodities Real estate

2020 2021 YTD (as of 31 October 2021) MTD (as of 31 October 2021)

% Equities Corporate bonds Government bonds Commodities and real estate

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Base case views and implications

The economy’s post pandemic recovery has passed its peak with stimulus fading, shortages of labour and goods weighing on activity, and inflation exceeding expectations. Growth is expected to moderate, but remain robust

Our central case is that stronger-than-consensus inflation over the coming months is still likely to be driven by factors that are largely transitory, such as supply-demand imbalances, and supply-chain disruptions

US

US equity valuations are relatively high which implies some caution. However, exposure to quality names, mega-cap tech and the digital economy remains beneficial

Risks to US Treasury yields remain tilted to the upside amid robust global growth expansion, Fed policy normalisation and inflation uncertainties. We remain underweight

Eurozone growth is expected to remain strong going into year-end as service sector activity recovers. A ramp up in investment over the coming quarters is possible amid Next generation EU funds. Upside inflation risks are less pronounced relative to the US

UK activity has recently cooled amid supply-side disruptions to labour and goods markets. There are greater upside risks to inflation relative to the eurozone with the Bank of England likely to lead the Fed on rate hikes

Euro

pe

European equities can continue to benefit from robust economic growth amid exposure to cyclical and value factors. Strong year-to-date performance may cap the upside however

European government bond valuations remain unattractive and diversification properties limited in our view. We prefer Treasuries

China’s growth is expected to moderate over the remainder of 2021 amid headwinds from virus outbreaks, past policy tightening, and a slowdown in the property sector. Positively, however, policy is being eased to help offset these headwinds

Positively for India’s near-term outlook, the country’s vaccination programme has been significantly ramped up which can help unleash pent-up services demand

The majority of Japan’s population is now fully vaccinated and with the delta wave having ebbed, domestic demand can pick up over the coming months. The manufacturing sector can also benefit from growth in global capex spending

Asi

a

Chinese equity valuations are not generous enough to compensate for risks related to regulatory pressures and weakening growth. We maintain a neutral view

We hold an overweight view on Japan equities given its status as a value and cyclicals exposed market that has seen decent earnings performance in recent months

ASEAN equity performance has lagged during the recovery phase implying scope for catch-up once virus headwinds are overcome

In Latin America, easing virus outbreaks supports the near-term outlook, although the recovery is likely to be constrained by limited policy support, vaccination, and shortages of intermediate goods/supply-chain disruptions

Performance in Eastern Europe and Russia is likely to be relatively strong in coming quarters, with Russia supported by higher oil prices and other countries vaccinating fast. Less positively, elevated inflation is likely to require monetary policy tightening

In our view, Gulf economies should experience a strong recovery this year amid rapid Covid-19 vaccination, combined with higher oil prices and production. However, other parts of MENA are likely to lag amid fiscal constraints and a lack of vaccine access

Oth

er E

M

Policy headwinds and challenges in vaccine distribution are likely to weigh on EMs. We maintain a neutral stance on EM equities

EM fixed income valuations are more attractive versus EM equities. In particular, RMB bonds offer a good balance of carry and diversification

Base case view and implicationsMonthly macroeconomic update

Source: HSBC Asset Management. As at 1 November 2021. The views expressed were held at the time of preparation, and are subject to change

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Asset class House view

View change Comments

Equi

ties

Global p – We are entering the expansion phase of the economic cycle. Risk assets can still provide decent returns in this environment, albeit lower than in the recent past as upside growth surprises are limited and policy normalisation begins. Sticky inflation is a key risk

US 1 – US equity valuations are relatively high which implies some caution alongside the likely tapering of Fed asset purchases in the coming months. However, exposure to quality names, mega-cap tech and the digital economy remains beneficial

UK p – UK indices are heavily exposed to the value factor which still have scope to perform well in the current market environment. Nevertheless, domestic-focused stocks may struggle given a recent growth slowdown and a relatively hawkish fiscal and monetary policy stance

Eurozone p – European equities can continue to benefit from robust economic growth and the rollout of Next Generation grants and loans. Strong year-to-date performance and structurally weak underlying growth may cap the upside however

Japan p – This market benefits from relatively good earnings performance and a decent macro outlook as domestic vaccination accelerates and global capex spending increases. However, we think this allocation should be balanced given its implicit bet against the digital economy and quality factor

Emerging Markets (EM) 1

– Policy headwinds and challenges in vaccine distribution are likely to weigh on performance, while from a valuation perspective, EM equities in aggregate are not particularly cheap versus other equity markets. EM fixed income valuations are more attractive

CEE & Latam 1 – EMs outside of Asia can perform well in a backdrop of global economic recovery and higher commodity prices, but new virus variants, slow vaccine rollout and relatively constrained policy space remain key challenges. We think the risk-reward of ASEAN is better than Latam

Gov

ernm

ent

bond

s

Developed Markets (DM) q

– Valuations have recently improved amid a repricing of inflation and interest rate risks. However, we believe risks to yields remain tilted to the upside even if gradual policy normalisation limits the risk of a sharp jump higher

US q – Global growth expansion, central bank policy normalisation and inflation uncertainties pose downside risks although a big move higher in yields isunlikely given the pricing in of inflation risks and global demand

UK q – Prospective risk-adjusted returns continue to look poor to us. Risks of more persistent inflation pressures amid supply chain disruptions support the case for Bank of England policy tightening, although ongoing gilt purchases is a positive

Eurozone q – Prospective returns are negative and diversification benefits limited. There is no clear reason why investors should own core European bonds versus other government bonds. The ECB’s bond-buying is also set to decrease in 2022

Japan q – Japanese government bonds (JGBs) are overvalued, in our view – the bond risk premium remains negative. However, the “Yield Curve Control” framework should limit volatility and the risk of significantly higher yields in the near-term

EM localcurrency p – Prospective returns are relatively high, although this is mainly due to our view that EM currencies are undervalued. It will be crucial to monitor

economic recovery trends and US bond yields and the dollar. Different political regimes in the EM universe also mean that being selective is key

Asset class positioning





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View change Comments

Cor

pora

te b

onds

Global investment grade (IG)

q – Prospective returns are unattractive, particularly for longer-duration bonds, although spreads are likely to remain tight on the back of still accommodative monetary policy. We maintain a defensive positioning and are more positive on shorter-duration bonds and Asia IG

USD IG q – Valuations are relatively unattractive, especially for longer-duration bonds. US IG may come under pressure from any unexpected worsening of corporate fundamentals. Overall policy settings remain supportive

EUR and GBP IG q – Spreads are at historically tight levels and it will be important to monitor trends in corporate fundamentals. Positively, the European Central Bank

(ECB) is still engaged in substantial corporate bond purchases and European GDP growth should maintain a robust pace in the coming quarters

Asia IG p – There is a valuation gap versus DM counterparts. USD weakness is a positive for corporates with USD-denominated debt. Nevertheless, pockets of issuers remain vulnerable to the Covid-19 crisis. A focus on quality issuers remains important

Global high-yield (HY) q – Default-adjusted spreads are at multi-year lows. This implies an asymmetric return profile where positive surprises have limited impact

on performance. We continue to prefer Asia credits to DM

US HY q – Spreads are at levels consistent with an underweight view and there are also uncertainties on the default outlook. Positively, however, the US economy is performing well, while higher oil prices benefits energy names

Europe HY q – Valuations are consistent with an underweight position. Underlying corporate fundamentals remain fairly fragile in the current environment. Nevertheless, monetary policy is ultra-accommodative, including ECB measures to support the market

Asia HY p – Default rates should remain low and spreads look attractive relative to other global opportunities. China’s economy and default rates need to be monitored closely in the context of tightening policy, deleveraging efforts, and regulatory pressures

Alt

erna

tive

s

EM aggregate bond (USD) 1 – Prospective returns are not particularly generous enough to compensate for risks such as limited EM policy space, vaccine challenges, and higher

US yields. Defaults are expected to increase

Gold 1 – The environment of “lower-for-even-longer” interest rates and inflation risks remains a favourable backdrop. Gold can also offer reasonable diversification benefits. But upside could be limited by economic recovery, higher bond yields, and declining geopolitical tensions

Other commodities 1 – Industrial commodities could benefit from inflation hedging demand and still robust global growth. USD weakness and supply constraints would

also be a tailwind. In the near term, spot prices remain vulnerable to global growth disappointments, especially in China

Real estate p The dividend yield from the sector offers a significant premium over equities and DM government bonds. We believe decent dividend yields and economic expansion should result in attractive long-run prospective returns. The asset class also offers partial inflation hedging properties too






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View changeComments

Asi

an a

sset

s

EM Asian government bonds (USD)

q – Sound economic fundamentals, stable inflation and credit quality are supportive. However, Asian bond spreads look particularly tight compared with other EM regions, reducing their relative attractiveness

Asia ex-Japan equities 1 – Policy normalisation and regulatory headwinds are key concerns, along with prospects of higher US yields and a stronger USD. Moderating

Chinese growth and nascent inflationary pressures weigh on the outlook

China equities 1 – Regulatory uncertainty is likely to linger. Moderating domestic growth and concerns of spillover effects from rising input costs and credit concerns in the property sector are expected to weigh. Prospective earnings continue to be revised lower

India equities 1 – The medium-term growth outlook remains intact amid continued fiscal support, and recent progress with land and labour reforms. Despite this, valuations are at historical highs, while earnings downgrades pick up

Hong Kong equities p

– Hong Kong remains an attractive listing hub underpinned by greater primary and secondary market activity, while exposure to cyclical and value sectors can be beneficial. Nevertheless, the market is exposed to heightened regulatory scrutiny and negative investor sentiment

Singapore equities p – Prospective risk-adjusted returns are consistent with our overweight position, with the high dividend yield attractive. Rising yields benefit financials

South Korea equities 1 – Korea can offer exposure to electric vehicle and battery themes, and has a meaningful beta to global growth. However, exposure to growth stocks

implies vulnerability to higher global bond yields. A tighter domestic monetary policy outlook further weighs on valuations

Taiwan equities 1 – Taiwan benefits from structural demand in 5G and semiconductors. Taiwan equities have significant exposure to growth/tech sectors which are sensitive to US yields. Geopolitical risks continue to linger






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Market dataOctober 2021

Past performance is not an indication of future returns*Indices expressed as total returns. All others are price returns. Sources: Bloomberg, HSBC Asset Management. Data as at close of business 31 October 2021

MTD 3M 1-year YTD 52-week 52-week FwdClose Change Change Change Change High Low P/E

Equity Indices (%) (%) (%) (%) (X)WorldMSCI AC World Index (USD) 745 5.0 2.9 35.3 15.3 749 547 18.9North AmericaUS Dow Jones Industrial Average 35,820 5.8 2.5 35.2 17.0 36,010 26,144 18.7US S&P 500 Index 4,605 6.9 4.8 40.8 22.6 4,620 3,234 21.9US NASDAQ Composite Index 15,498 7.3 5.6 42.0 20.3 15,542 10,823 32.5Canada S&P/TSX Composite Index 21,037 4.8 3.7 35.0 20.7 21,312 15,418 16.4Europe MSCI AC Europe (USD) 562 4.3 0.9 38.7 13.1 574 402 15.3Euro STOXX 50 Index 4,251 5.0 3.9 43.7 19.6 4,292 2,929 16.8UK FTSE 100 Index 7,238 2.1 2.9 29.8 12.0 7,290 5,534 12.7Germany DAX Index* 15,689 2.8 0.9 35.8 14.4 16,030 11,450 15.2France CAC-40 Index 6,830 4.8 3.3 48.7 23.0 6,914 4,519 16.3Spain IBEX 35 Index 9,058 3.0 4.4 40.4 12.2 9,311 6,345 15.6Italy FTSE MIB 26,876 4.6 6.0 49.8 20.9 27,303 17,670 13.3Asia PacificMSCI AC Asia Pacific ex Japan (USD) 647 1.7 -0.8 13.5 -2.2 746 569 15.5Japan Nikkei-225 Stock Average 28,893 -1.9 5.9 25.7 5.3 30,796 23,097 18.1Australian Stock Exchange 200 7,324 -0.1 -0.9 23.6 11.2 7,633 5,904 18.2Hong Kong Hang Seng Index 25,377 3.3 -2.2 5.3 -6.8 31,183 23,681 12.6Shanghai Stock Exchange Composite Index 3,547 -0.6 4.4 10.0 2.1 3,732 3,210 13.0Hang Seng China Enterprises Index 8,962 2.7 -2.9 -8.2 -16.5 12,272 8,359 10.3Taiwan TAIEX Index 16,987 0.3 -1.5 35.4 15.3 18,034 12,481 13.3Korea KOSPI Index 2,971 -3.2 -7.2 31.0 3.4 3,316 2,268 10.7India SENSEX 30 Index 59,307 0.3 12.8 49.7 24.2 62,245 39,335 25.8Indonesia Jakarta Stock Price Index 6,591 4.8 8.6 28.5 10.2 6,687 5,074 18.5Malaysia Kuala Lumpur Composite Index 1,562 1.6 4.5 6.5 -4.0 1,696 1,452 15.8Philippines Stock Exchange PSE Index 7,055 1.5 12.5 11.6 -1.2 7,432 6,081 20.6Singapore FTSE Straits Times Index 3,198 3.6 1.0 31.9 12.5 3,237 2,424 14.9Thailand SET Index 1,623 1.1 6.7 35.9 12.0 1,658 1,191 18.6Latam Argentina Merval Index 83,561 8.0 26.6 84.5 63.1 90,577 44,289 12.4Brazil Bovespa Index* 103,501 -6.7 -15.0 10.2 -13.0 131,190 93,559 7.2Chile IPSA Index 4,092 -6.2 -3.8 15.6 -2.0 5,006 3,490 9.5Colombia COLCAP Index 1,394 2.4 12.7 22.6 -3.0 1,468 1,130 10.1Mexico S&P/BMV IPC Index 51,310 -0.1 0.9 38.7 16.4 53,400 36,662 14.5EEMEARussia MOEX Index 4,150 1.1 10.0 54.2 26.2 4,293 2,658 7.0South Africa JSE Index 67,465 5.0 -2.2 30.5 13.6 69,814 51,226 9.8Turkey ISE 100 Index* 1,522 8.2 9.3 36.8 3.1 1,589 1,096 5.9

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Market data (continued)October 2021

Past performance is not an indication of future returnsTotal return includes income from dividends and interest as well as appreciation or depreciation in the price of an asset over the given periodSources: Bloomberg, HSBC Asset Management. Data as at close of business 31 October 2021

All total returns quoted in USD terms.Data sourced from MSCI AC World Total Return Index, MSCI USA Total Return Index, MSCI AC Europe Total Return Index, MSCI AC Asia Pacific ex Japan Total Return Index, MSCI Japan Total Return Index, MSCI Latam Total Return Index and MSCI Emerging Markets Total Return Index.

3-month YTD 1-year 3-year 5-year DividendChange Change Change Change Change Yield

Equity Indices - Total Return (%) (%) (%) (%) (%) (%)Global equities 3.3 16.8 37.3 62.1 98.7 1.8US equities 4.8 23.0 42.7 80.0 135.7 1.3Europe equities 1.0 15.0 40.9 41.8 65.0 2.7Asia Pacific ex Japan equities -0.2 -0.4 15.8 47.5 65.6 2.5Japan equities 2.3 2.3 19.9 31.3 49.2 2.0Latam equities -14.4 -10.6 21.9 -12.2 -5.6 5.2Emerging Markets equities -0.5 -0.3 17.0 41.6 56.7 2.4

MTD 3-month 1-year YTD

Close Change Change Change Change

Bond indices - Total Return (%) (%) (%) (%)BarCap GlobalAgg (Hedged in USD) 588 -0.3 -1.4 -0.8 -1.7

JPM EMBI Global 920 0.1 -1.0 4.1 -1.5

BarCap US Corporate Index (USD) 3,524 0.2 -1.1 2.2 -1.0

BarCap Euro Corporate Index (Eur) 263 -0.7 -1.8 0.1 -1.1

BarCap Global High Yield (USD) 559 -0.5 -0.5 9.1 2.3

BarCap US High Yield (USD) 2440 -0.2 0.3 10.5 4.4

BarCap pan-European High Yield (USD) 514 -0.6 -0.2 9.2 3.8

BarCap EM Debt Hard Currency 458 -0.5 -1.5 2.7 -2.2

Markit iBoxx Asia ex-Japan Bond Index (USD) 224 -1.3 -1.9 -0.2 -2.2

Markit iBoxx Asia ex-Japan High-Yield Bond Index (USD) 258 -5.4 -7.6 -6.5 -10.2

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Past performance is not an indication of future returnsSources: Bloomberg, HSBC Asset Management. Data as at close of business 31 October 2021

End of 3-months 1-year Year End Bonds Close last mth. Ago Ago 2020US Treasury yields (%)3-Month 0.05 0.03 0.04 0.09 0.062-Year 0.50 0.28 0.18 0.15 0.125-Year 1.18 0.96 0.69 0.38 0.3610-Year 1.55 1.49 1.22 0.87 0.9130-Year 1.93 2.04 1.89 1.66 1.64Developed market 10-year bond yields (%)Japan 0.09 0.07 0.02 0.04 0.02UK 1.03 1.02 0.56 0.26 0.19Germany -0.11 -0.20 -0.46 -0.63 -0.57France 0.27 0.15 -0.11 -0.34 -0.34Italy 1.17 0.86 0.62 0.76 0.54Spain 0.61 0.46 0.27 0.13 0.04

Latest MTD 3-month 1-year YTD 52-week 52-week

Change Change Change Change High Low

Commodities (% ) (% ) (% ) (% )

Gold 1,783 1.5 -1.7 -5.1 -6.1 1,966 1,677

Brent Oil 84.4 7.5 10.5 125.3 62.9 87 36

WTI Crude Oil 83.6 11.4 13.0 133.5 72.2 85 34

R/J CRB Futures Index 238 3.8 9.0 64.2 41.7 241 143

LME Copper 9,496 6.3 -2.4 41.3 22.3 10,748 6,670

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Past performance is not an indication of future returnsSources: Bloomberg, HSBC Asset Management. Data as at close of business 31 October 2021

End of 3-mths 1-year Year End 52-week 52-weekCurrencies (vs USD) Latest last mth. Ago Ago 2020 High LowDeveloped markets DXY index 94.12 94.23 92.17 94.04 89.94 94.56 89.21EUR/USD 1.16 1.16 1.19 1.16 1.22 1.23 1.15GBP/USD 1.37 1.35 1.39 1.29 1.37 1.42 1.29CHF/USD 1.09 1.07 1.10 1.09 1.13 1.14 1.06CAD 1.24 1.27 1.25 1.33 1.27 1.34 1.20JPY 114.0 111.3 109.7 104.7 103.3 114.7 102.6AUD 1.33 1.38 1.36 1.42 1.30 1.43 1.25NZD 1.39 1.45 1.43 1.51 1.39 1.52 1.34

Asia HKD 7.78 7.79 7.77 7.75 7.75 7.79 7.75CNY 6.41 6.44 6.46 6.69 6.53 6.75 6.36INR 74.88 74.24 74.42 74.11 73.07 75.68 72.27MYR 4.14 4.19 4.22 4.16 4.02 4.25 4.00KRW 1,168 1,184 1,150 1,135 1,087 1,200 1,080TWD 27.80 27.82 27.96 28.58 28.09 28.69 27.48

Latam BRL 5.64 5.44 5.21 5.74 5.19 5.88 4.89COP 3,767 3,809 3,876 3,865 3,428 4,006 3,374MXN 20.56 20.64 19.87 21.18 19.91 21.98 19.55ARS 99.72 98.74 96.69 78.32 84.15 99.84 78.18

EEMEARUB 70.84 72.75 73.17 79.40 74.04 80.95 69.22ZAR 15.24 15.07 14.60 16.24 14.69 16.43 13.41

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For Professional Clients and intermediaries within countries and territories set out below; and for Institutional Investors and Financial Advisors in Canada and the US. This document should not be distributed to or relied upon by Retail clients/investors.

The value of investments and the income from them can go down as well as up and investors may not get back the amount originally invested. The capital invested in the fund can increase or decrease and is not guaranteed. The performance figures contained in this document relate to past performance, which should not be seen as an indication of future returns. Future returns will depend, inter alia, on market conditions, fund manager’s skill, fund risk level and fees. Where overseas investments are held the rate of currency exchange may cause the value of such investments to go down as well as up. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in some established markets. Economies in Emerging Markets generally are heavily dependent upon international trade and, accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries and territories with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries and territories in which they trade. Mutual fund investments are subject to market risks, read all scheme related documents carefully.

The contents of this document may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose. All non-authorised reproduction or use of this document will be the responsibility of the user and may lead to legal proceedings. The material contained in this document is for general information purposes only and does not constitute advice or a recommendation to buy or sell investments. Some of the statements contained in this document may be considered forward looking statements which provide current expectations or forecasts of future events. Such forward looking statements are not guarantees of future performance or events and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors. We do not undertake any obligation to update the forward-looking statements contained herein, or to update the reasons why actual results could differ from those projected in the forward-looking statements. This document has no contractual value and is not by any means intended as a solicitation, nor a recommendation for the purchase or sale of any financial instrument in any jurisdiction in which such an offer is not lawful. The views and opinions expressed herein are those of HSBC Asset Management at the time of preparation, and are subject to change at any time. These views may not necessarily indicate current portfolios' composition. Individual portfolios managed by HSBC Asset Management primarily reflect individual clients' objectives, risk preferences, time horizon, and market liquidity. Foreign and emerging markets. Investments in foreign markets involve risks such as currency rate fluctuations, potential differences in accounting and taxation policies, as well as possible political, economic, and market risks. These risks are heightened for investments in emerging markets which are also subject to greater illiquidity and volatility than developed foreign markets. This commentary is for information purposes only. These views presented are based on our global views and may not necessarily align with our local views. It is a marketing communication and does not constitute investment advice or a recommendation to any reader of this content to buy or sell investments nor should it be regarded as investment research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

Basis of Views and Definitions of ‘Asset class positioning’ tables

Views are based on regional HSBC Asset Management Asset Allocation meetings held throughout October 2021, HSBC Asset Management’s long-term expected return forecasts which were generated as at 30 September 2021, our portfolio optimisation process and actual portfolio positions.

Icons: View on this asset class has been upgraded – No change View on this asset class has been downgraded. Underweight, overweight and neutral classifications are the high-level asset allocations tilts applied in diversified, typically multi-asset portfolios, which reflect a combination of our

long-term valuation signals, our shorter-term cyclical views and actual positioning in portfolios. The views are expressed with reference to global portfolios. However, individual portfolio positions may vary according to mandate, benchmark, risk profile and the availability and riskiness of individual asset classes in different regions.

“Overweight” implies that, within the context of a well-diversified typically multi-asset portfolio, and relative to relevant internal or external benchmarks, HSBC Global Asset Management has (or would have) a positive tilt towards the asset class.

“Underweight” implies that, within the context of a well-diversified typically multi-asset portfolio, and relative to relevant internal or external benchmarks, HSBC Global Asset Management has (or would) have a negative tilt towards the asset class.

“Neutral” implies that, within the context of a well-diversified typically multi-asset portfolio, and relative to relevant internal or external benchmarks HSBC Global Asset Management has (or would have) neither a particularly negative or positive tilt towards the asset class.

For global investment-grade corporate bonds, the underweight, overweight and neutral categories for the asset class at the aggregate level are also based on high-level asset allocation considerations applied in diversified, typically multi-asset portfolios. However, USD investment-grade corporate bonds and EUR and GBP investment-grade corporate bonds are determined relative to the global investment-grade corporate bond universe.

For Asia ex Japan equities, the underweight, overweight and neutral categories for the region at the aggregate level are also based on high-level asset allocation considerations applied in diversified, typically multi-asset portfolios. However, individual country views are determined relative to the Asia ex Japan equities universe as of 31 July 2021.

Similarly, for EM government bonds, the underweight, overweight and neutral categories for the asset class at the aggregate level are also based on high-level asset allocation considerations applied in diversified, typically multi-asset portfolios. However, EM Asian Fixed income views are determined relative to the EM government bonds (hard currency) universe as of 30 September 2021.

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All data from HSBC Asset Management unless otherwise specified. Any third party information has been obtained from sources we believe to be reliable, but which we have not independently verified.

HSBC Asset Management is the brand name for the asset management business of HSBC Group, which includes the investment activities provided through our local regulated entities. HSBC Asset Management is a group of companies in many countries and territories throughout the world that are engaged in investment advisory and fund management activities, which are ultimately owned by HSBC Holdings Plc. (HSBC Group). The above communication is distributed by the following entities:

In Argentina by HSBC Global Asset Management Argentina S.A., Sociedad Gerente de Fondos Comunes de Inversión, Agente de administración de productos de inversión colectiva de FCI N°1; In Australia, this document is issued by HSBC Bank Australia Limited ABN 48 006 434 162, AFSL 232595, for HSBC Global Asset Management (Hong Kong) Limited ARBN 132 834 149 and HSBC Global Asset Management (UK) Limited ARBN 633 929 718. This document is for institutional investors only, and is not available for distribution to retail clients (as defined under the Corporations Act). HSBC Global Asset Management (Hong Kong) Limited and HSBC Global Asset Management (UK) Limited are exempt from the requirement to hold an Australian financial services license under the Corporations Act in respect of the financial services they provide. HSBC Global Asset Management (Hong Kong) Limited is regulated by the Securities and Futures Commission of Hong Kong under the Hong Kong laws, which differ from Australian laws. HSBC Global Asset Management (UK) Limited is regulated by the Financial Conduct Authority of the United Kingdom and, for the avoidance of doubt, includes the Financial Services Authority of the United Kingdom as it was previously known before 1 April 2013, under the laws of the United Kingdom, which differ from Australian laws; in Bermuda by HSBC Global Asset Management (Bermuda) Limited, of 37 Front Street, Hamilton, Bermuda which is licensed to conduct investment business by the Bermuda Monetary Authority; in Canada by HSBC Global Asset Management (Canada) Limited which provides its services as a dealer in all provinces of Canada except Prince Edward Island and also provides services in Northwest Territories. HSBC Global Asset Management (Canada) Limited provides its services as an advisor in all provinces of Canada except Prince Edward Island; in Chile: Operations by HSBC's headquarters or other offices of this bank located abroad are not subject to Chilean inspections or regulations and are not covered by warranty of the Chilean state. Further information may be obtained about the state guarantee to deposits at your bank or on www.sbif.cl; in Colombia: HSBC Bank USA NA has an authorized representative by the Superintendencia Financiera de Colombia (SFC) whereby its activities conform to the General Legal Financial System. SFC has not reviewed the information provided to the investor. This document is for the exclusive use of institutional investors in Colombia and is not for public distribution; in Finland, Norway, Denmark and Sweden by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026) and through the Stockholm branch of HSBC Global Asset Management (France), regulated by the Swedish Financial Supervisory Authority (Finansinspektionen); in France, Belgium, Netherlands, Luxembourg, Portugal, Greece by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026); in Germany by HSBC Global Asset Management (Deutschland) GmbH which is regulated by BaFin (German clients) respective by the Austrian Financial Market Supervision FMA (Austrian clients); in Hong Kong by HSBC Global Asset Management (Hong Kong) Limited, which is regulated by the Securities and Futures Commission; in India by HSBC Asset Management (India) Pvt Ltd. which is regulated by the Securities and Exchange Board of India; In Israel, HSBC Bank plc (Israel Branch) is regulated by the Bank of Israel. This document is only directed in Israel to qualified investors (under the Investment advice, Investment marketing and Investment portfolio management law-1995) of the Israeli Branch of HBEU for their own use only and is not intended for distribution; in Italy and Spain by HSBC Global Asset Management (France), a Portfolio Management Company authorised by the French regulatory authority AMF (no. GP99026) and through the Italian and Spanish branches of HSBC Global Asset Management (France), regulated respectively by Banca d’Italia and Commissione Nazionale per le Società e la Borsa (Consob) in Italy, and the ComisiónNacional del Mercado de Valores (CNMV) in Spain; in Mexico by HSBC Global Asset Management (Mexico), SA de CV, Sociedad Operadora de Fondos de Inversión, Grupo Financiero HSBC which is regulated by Comisión Nacional Bancaria y de Valores; in the United Arab Emirates, Qatar, Bahrain & Kuwait by HSBC Bank Middle East Limited which are regulated by relevant local Central Banks for the purpose of this promotion and lead regulated by the Dubai Financial Services Authority. in Oman by HSBC Bank Oman S.A.O.G regulated by Central Bank of Oman and Capital Market Authority of Oman; in Peru: HSBC Bank USA NA has an authorized representative by the Superintendencia de Banca y Seguros in Perú whereby its activities conform to the General Legal Financial System - Law No. 26702. Funds have not been registered before the Superintendencia del Mercado de Valores (SMV) and are being placed by means of a private offer. SMV has not reviewed the information provided to the investor. This document is for the exclusive use of institutional investors in Perú and is not for public distribution; in Singapore by HSBC Global Asset Management (Singapore) Limited, which is regulated by the Monetary Authority of Singapore; in Switzerland by HSBC Global Asset Management (Switzerland) AG whose activities are regulated in Switzerland and which activities are, where applicable, duly authorised by the Swiss Financial Market Supervisory Authority. Intended exclusively towards qualified investors in the meaning of Art. 10 para 3, 3bis and 3ter of the Federal Collective Investment Schemes Act (CISA); in Taiwan by HSBC Global Asset Management (Taiwan) Limited which is regulated by the Financial Supervisory Commission R.O.C. (Taiwan); in the UK by HSBC Global Asset Management (UK) Limited, which is authorised and regulated by the Financial Conduct Authority; and in the US by HSBC Global Asset Management (USA) Inc. which is an investment adviser registered with the US Securities and Exchange Commission.

Copyright © HSBC Global Asset Management Limited 2021. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Global Asset Management Limited. ED 3255. Exp. 01.05.2022

NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

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investment monthly – november 2021

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